Per a Finimize report, global food prices climbed higher during the month of September to reach the highest level in the past year and a half according to the United Nations Food and Agricultural Organization (FAO). Sugar prices led the pack, opening up opportunities to invest in rising prices or agricultural commodities in general.
“The FAO’s food price index climbed to 124.4 points in September, up from 120.7 in August,” the report added. "Sugar prices shot up by 10.4% due to poor crop forecasts in Brazil and India’s policy changes allowing more sugarcane for ethanol, potentially limiting exports.
If bullish pressure for sugar prices remain, investors can take advantage now. Funds like the Teucrium Sugar ETF (CANE ) can offer portfolio diversification with exposure to agricultural commodities like sugar, primarily via futures contracts.
Investors who don’t want concentrated exposure to sugar can also opt for a broad play on ag commodities. Though heading lower for much of the year, an improving macroeconomic global environment such as rising demand from China could fuel higher prices.
Broad Play on Rising Food Prices
Food prices rising across the globe could also trigger price increases in other agricultural commodities. As the FAO noted, sugar wasn’t the only commodity heading higher as of late as the macroeconomic environment continues to struggle with inflation.
“Cereal prices increased by 3%, driven by higher wheat and maize export costs, though rice prices fell slightly by 0.7%,” the Finimize report said further. “Meanwhile, vegetable oils and dairy prices rose by 4.6% and 3.8%, respectively, with meat prices up 0.4%. Despite these hikes, the FAO slightly raised its forecast for global.”
If the trend persists, one fund to look at is the Teucrium Agricultural Fund (TAGS ). The fund combines exposure to Teucrium exchange traded funds focused on corn, wheat, soybeans, and sugar. Traders or long-term investors can focus on TAGS for broad-based exposure or the individual funds for a more focused, concentrated approach in specific commodities.
The individual funds featured in TAGS:
- Teucrium Corn Fund (CORN )
- Teucrium Wheat Fund (WEAT )
- Teucrium Soybean Fund (SOYB )
- Teucrium Sugar Fund (CANE )
Furthermore, getting ag commodities exposure can provide a portfolio with the diversification it needs to help navigate market uncertainty. That said, TAGS is an ideal complement to a traditional 60/40 stock/bond portfolio with uncorrelated assets exposure in the convenience of one dynamic ETF. For more concentrated exposure in specific commodities, investors can also invest in the individual funds mentioned.
For more news, information, and analysis, visit the Commodities Channel.
